Motorola Inc., announced on Tuesday that its handset sales continued to surge in the fourth quarter, but that overall earnings were weaker than predicted due to poor results in the wireless equipment business.

In the first quarter of 2005, the company’s net earnings were at $692 million, or $.028/share. On Tuesday, the company’s net earnings were down slightly to $686 million, or $0.27/share.

This fell $0.02/share short of the average analyst forecast, as determined by a poll of 26 analysts conducted by Thomson Financial. But Motorola’s overall revenue was above the average estimate of $9.6 billion. The company’s sales increased 23% over last year, to finish the quarter at $10 billion.

The only major letdown was the company’s networks division, which say sales decline by 14% to $1.43 billion, while profits fell 44% to $132 million, falling well short of the company’s own goals.

“People [on Wall Street] were expecting a good report in handsets, and they got it,” said Charter Equity Research analyst, Ed Snyder. “But networks was really bad.”

Motorola CEO, Ed Zander, admitted that the networks results were disappointing, but said that the continued declining profit is a temporary problem, and doesn’t reflect on the division’s long term potential. “I still think this is a very good business,” he commented. The company had previously announced some restructuring plans to increase the efficiency of the ailing networks division.

Motorola Inc., announced on Tuesday that its handset sales continued to surge in the fourth quarter, but that overall earnings were weaker than predicted due to poor results in the wireless equipment business.